According to the FAO (2015) Indonesia has around 91.0 million hectares of forested land, which constitutes to 53.0% of the total land area. Around 86.1 million hectares are primary or otherwise naturally regenerated forest, and around 4.9 million hectares are planted forest.
For the purposes of management, six types are distinguished: mixed hill forests, sub-montane / montane and alpine forests, savanna / bamboo / deciduous / monsoon forests, peat swamp forests, fresh water swamp forests, and tidal forests (mangroves). Mixed hill forests account for about 65% of the natural forests and are the most important for timber production.
Indonesia has three categories of forest land: Conservation Forests, Protection Forests, and Production Forests. More than half of the Indonesian forest area is production forest. Additionally, Indonesia has placed about 40 per cent of its total forest area aside for conservation of biodiversity or protection of ecological functions. A significant remaining part of the forest area convertible forest for non-forestry use.
Most of Indonesia’s forest is owned by the state (86.9%) and the remainder is so-called titled forest. A titled forest is a forest located on land on which the land title is registered by private organizations or individuals. The vast majority of the production forests are owned by the state, but directly managed by private corporations and institutions based on forest concessions.
There are two distinct forms of forest resource management in Indonesia. These are the plantation industry, which up until recently was dominated by teak plantations in Java, and the selective forestry, located mostly on outer islands. Over the past two decades, plantation forestry for the pulp and paper industry has become a significant component of Indonesia’s forest industry. Pulpwood plantations are dominated by acacia and eucalyptus species, which grow quickly in Indonesia’s tropical climate.
Production and export
According to ITTO (2017) the Indonesian industry produced in 2015 about 75 million m3 of roundwood, which is almost entirely used within the country. The export of primary timber products accounted for a total export value of 2,243.2 million US dollars in 2015, with plywood being the most important product and to a lesser extent also sawnwood.
The high domestic consumption of logs in the table above is due to the use by domestic industries, in particular the pulp and paper industry and tertiary industries such as furniture production. With the exception of pulp and paper, timber industries have been on a decline since the late 90’s. Pulp and paper demand now makes up 50 per cent of the log output in Indonesia, which mainly originates from plantations. Indonesia is a net exporter of timber and timber products and although exports are going worldwide, the Far East contributes to the majority of the timber exports. Key exports include processed goods, namely: plywood, pulp and paper, mouldings and joinery, furniture, sawn timber and veneer. The graph below only covers the customs product code 44 Wood and articles of wood, wood charcoal. This contributes approximately to 40% of the country’s export of wood-based products, while pulp and paper products account for over 50% of Indonesia’s wood-based exports. This demonstrates the particular relevance of the pulp and paper industry for the Indonesian forest sector.
Commonly harvested species for the timber industry include:
- Meranti (Shorea spp.)
- Keruing (Dipterocarpus spp.)
- Kapur (Dryobalanops spp.)
- Mersawa (Anisoptera spp.)
- Teak (Tectona grandis) from plantations
Sources of information
- FAO (2015) Global Forest Resources Assessment 2015.
- Fordaq - timber trade network
- Forest Legality Alliance country profile – Indonesia.
- ITC (International Trade Centre) calculations based on UN Comtrade statistics
- ITS Global (2011) The Economic Contribution of Indonesia’s Forest-Based Industries
- ITTO (2011) Status of tropical forest management 2011 – Indonesia
- ITTO (2017) ITTO Biennial review and assessment of the world timber situation 2015-2016.
- World Port Source - Map of ports in Indonesia with container liner service.
Forestry Law No.41/1999 is the primary legislative instrument that governs forestry in Indonesia. Before 2015, forest areas were classified into 2 categories based on its status, the first is state forest (hutan negara) and the second is forest subject to rights (hutan hak).
With the reformation on forestry sector in 2015, the Indonesia government has issued a decree namely Ministry of Environmental and Forestry regulation No. P.32/ 2015 where forest areas are classified as:
- State forest (hutan negara)
- Forest subject to rights (hutan hak)
- Indigenous forest (hutan adat)
The government recognizes that forest areas can fulfil 3 distinctive functions:
Based on its function, there are three main administrative forest categories for state forests in Indonesia:
- Production Forest (Hutan Produksi), the most common type with sub-categories such as:
- Permanent Production Forest, (Hutan Produksi Tetap - HP). The Permanent Production Forest has characteristics such as less steep slopes, less sensitive soil types and less precipitation intensity, which taken together dictate these areas may be selectively logged in a normal manner.
- Limited Production Forest, (Hutan Produksi Terbatas – HPT) refers to those parts of the Production Forest with specific characteristic such as steep slopes, sensitive soil type and high precipitation intensity which, taken together, dictate that these areas be logged less intensively than is permitted in the permanent production forest.
- Convertible Production Forest (Hutan Produksi yang dapat di Konversi – HPK) refers to those parts of production forest that is permissible to be converted to other non-forestry land use.
- Protection Forest (Hutan Lindung – HL) e.g. for watersheds
- Conservation Forest (Hutan Konservasi – HK) which includes Nature Reserves, Nature Conservation areas and Hunting Parks (KSA/KPA/TB).
The definition of those 3 forest categories are stipulated in a government regulation Peraturan Pemerintah Republik Indonesia Nomor 44 Tahun 2004 mengenai Perencanaan Hutan along with criteria of each forest.
All timber production from state forest both natural forest and plantation can only be designated in the production forest. Under Regulation nr. 6 from 2007, with its recent revision (Peraturan Pemerintah Republik Indonesia Nomor 3 Tahun 2008) obliges all concession holders that want to produce timber within the state forest (natural forest and plantation) to develop 10-year forest management plans and annual operational plans. IHMB (Inventarisasi Hutan Menyeluruh Berkala) or Periodic Comprehensive Forest Inventory will be the basis to determine annual harvest level by considering standing stock potency of forest stand and growth of commercial species at a particular size of forest area. Technical guidance to develop the Periodic Comprehensive Forest Inventory can be found in Regulation P.33 from 2014.
As above mentioned, only forest areas designated as production forest timber production is allowed. Both concession license holders of natural forest and plantations must follow the sylvicultural system set by the government, as stipulated in Ministry of Forestry regulation P.11/2009. Ministry to ensure aspect of sustainability in managing the state forest is complied.
STATE FOREST (HUTAN NEGARA)
Any entity that intends to do timber production, whether in natural forest or plantation forest with production function, must possess a concession license granted by the government. For natural forest the permit is 55 years maximum with a possible extension, whilst a plantation permit is granted for 100 years maximum without any exception for an extension.
For land conversion permit license holders (Izin Pemanfaatan Kayu – IPK)), based on government regulation Nr. 6/2007 the validity of the license is only for one year without any possibility of extension.
Once a business entity is granted a permit from the government then it’s obliged to develop a 10-year Forest Management Plan (Rencana Kerja Izin Usaha Pemanfaatan Hasil Hutan Kayu/RKUPHHK) based on a Periodic Comprehensive Forest Inventory (IHMB (Inventarisasi Hutan Menyeluruh Berkala - IHMB), and an Annual Operational Plan (Rencana Kerja Tahunan - RKT).
For IPK (Izin Pemanfaatan Kayu) /land conversion permit license holders, the licensee is only obliged to develop an Annual Operational Plan (Rencana Kerja Tahunan - RKT) based on merchantable standing stock.
License holders also need to comply with several international conventions such as CITES, IUCN, CBD and national regulation, such as Undang-Undang Nomor 5 Tahun 1990 tentang Konservasi Sumberdaya Alam Hayati dan Ekosistemnya for the protection of flora and fauna where license holder is restricted to harvest, keep and/or sell protected species under no circumstances.
Both in 10-years forest management plan (Rencana Kerja Izin Usaha Pemanfaatan Hasil Hutan Kayu/RKUPHHK) based on a IHMB (Inventarisasi Hutan Menyeluruh Berkala) or Periodic Comprehensive Forest Inventory and annual operational plan (Rencana Kerja Tahunan/RKT), the license holder for natural forest and plantation need to delineate protected areas such as river riparian, germ plasm conservation areas (Kawasan Pelestarian Plasma Nutfah - KPPN), community/indigenous sites (economy, religious and historical), permanent sample plots for growth and yield, wildlife preservation areas (kantong satwa), seed bank site (tegakan benih), etc.
Furthermore, prior to the initial operational/timber harvesting activities concession license holders must develop and implement an Environmental Impact Assessment, as set in Ministry of Environment Regulation Nr. 5/2012. This assessment also includes a Social Impact Assessment toward surrounding local communities. Potential impacts of forestry operations (in natural forest, plantations or during forest conversion) on the ecosystem, landscape, hydrology, species composition and wildlife habitat are studied.
PRIVATE FOREST (HUTAN HAK)
Legal rights to harvest in private forest (hutan hak) has less requirements as it is a private land and the size of the ownership is on average between 0.25 – 1 ha. The governance of private land is not within the Ministry of Environmental and Forestry instead it’s under National Land Agency (Badan Pertanahan Nasional/BPN). Act No 5/1960, is the basic agrarian legislation. Under the current SVLK-standard, legal rights to harvest in private land related to land ownership where there must be a record of ownership from the relevant authority.
For concession license holders operating in state forest, upon holding a valid license of a management rights it is obliged to settle a license fee (Iuran Izin Usaha Pemanfaatan Hasil Hutan Kayu - IIUPHHK) in accordance with government regulation Nr. 12/2014. [CN1] [IKP2] This license fee is calculated differently from 3 different regions (Sumatera & Sulawesi; Kalimantan & Maluku and Nusa Tenggara & Papua) and incurred per year per hectare per license to the concession license holder. An additional fee applies to plantation if the concession license holder is converting natural forest to plantation with a clear-cut system with artificial regeneration called Sistem Tebang Habis Permudaan Buatan (THPB), where the fee incurred is per license per hectare and per year.
For timber production from state forest, a concession license holder must settle 2 kinds of fees; Reforestation fund ( Dana Reboisasi - DR) and Forest Resources Provision (Provisi Sumber Daya Hutan - PSDH). The fees incurred are based on 3 different diameter classes of roundwood:
- Kayu Bulat (KB), diameter > 49 cm
- Kayu Bulat Sedang (KBS), diameter 30-49 cm
- Kayu Bulat Kecil (KBK), diameter < 30 cm
The fees vary per species group, such as Meranti (Shorea), Rimba Campur (Mixed Timber Species) and Kayu Indah (Fancy Timber Species) and per region (Sumatera & Sulawesi; Kalimantan & Maluku and Nusa Tenggara & Papua). Dana Reboisasi (DR) is set at a fix price in USD per m3 whilst forest resources provision (Provisi Sumber Daya Hutan/PSDH) is incurred based on benchmark price times 6-10%.
For private forest, as it is an individual property, there are no requirements to pay any fees on timber production and the only applicable regulation is that the land owner must settle property tax (Pajak Bumi dan Bangunan - PBB) on an annual basis to the local revenue agency (Dinas Pendapatan Daerah - Dispenda).
For communities, the requirements on taxes and fees are the same as for private forests.
[CN1]Peraturan Pemerintah Republik Indonesia Nomor 12 Tahunn 2014 tentang Jenis dan Tarif Atas Jenis Penerimaan Negara Bukan Pajak Yang Berlaku Pada Kementrian Kehutanan.
STATE FOREST (HUTAN NEGARA) – natural forest
Referring to the recent Regulation for Timber Administration, Nr. P60 from 2016 and P.43 from 2015. for natural forest (IUPHHK-HA) and forest conversion (IPK), prior to the development of Annual Operational Plan, the licensee must carry out a 100% pre-harvest inventory for merchantible species and tagged with a barcode label that specifies information such as compartment, tree number, species, diameter, tree height and tree position scanned with an Android handheld. The results of the pre-harvest inventory must be recorded electronically in an Inventory Report (Laporan Hasil Cruising - LHC) and uploaded it to the Ministry of Environment and Forestry Wood On-line Administration System (Sistem Informasi Peredaran Hasil Hutan)/SIPUHH) http://sipuhh.dephut.net.
Once the tree is felled and extracted to the log landing, the licensee must scale and grade the timber, and record it electronically in a Scaling & Grading Report (Buku Ukur), then upload it to SIPUHH-database. As the measurement at the log landing is considered a final one, the uploaded data will be retrieved as a draft to settle applicable tax and royalties.
Once tax and royalties has been settled, the licencee will be able to generate a Report on Timber Production (Laporan Hasil Produksi - LHP) then haul the logs to log yard. At the log yard, all logs will be stacked until the volume of the barge is reached. Prior to the shipment, the licensee needs to generate a Legal Transport Document (Surat Keterangan Sahnya Hasil Hutan - SKSHH) to accompany the timber during the shipment.
STATE FOREST (HUTAN NEGARA) – plantations
For plantations, referring to the recent regulation for timber administration Nr. P.58 from 2016 and P.42 from 2015 , prior to the development of an Annual Operational Plan, the concession licensee must carry out a timber inventory (cruising) with an appropriate sampling intensity, and record it in a Timber Cruising Report (Laporan Hasil Cruising - LHC) and upload it to the SIPUHH database. Regulation Nr. P.62 from 2008 sets the sampling intensity of timber cruising at 5% in the first rotation considering there are remaining natural forest stands and at 1% in the second rotation onwards, as it’s even-aged stands.
Once the tree is felled and extracted to the nearest log landing, the concession must carry out Scaling & Grading either for each individual tree or grouped with the conversion of staple meter/weight. Further process is similar with natural forest where once the measurement is completed then it needs to be recorded in a Grading Measurement Report (Buku Ukur), then the concession has to settle applicable and relevant taxes & fees then the concession can generate a Production Report (Laporan Hasil Produksi - LHP). The production report is produced on a bi-weekly basis and as a basis to issue legal transport document called Surat Keterangan Sahnya Hasil Hutan (SKSHH).
PRIVATE FOREST (HUTAN HAK)
For private land, there is no requirement to carry out any pre-harvest activities. Once the tree is felled and transported for delivery, the timber needs to have a Legal Transport Document (Nota Angkutan). This document contains information such as name of land owner, species, volume, destination, location of harvesting site, etc. The land owner can obtain a copy of this document from the relevant authority at no cost and fill out this form manually, according to Regulation P.85 from 2016 and P.48 from 2017. However, to prevent the abuse of this document, the government limits the scope for the use of the Legal Transport Document. It can be used for all private land on Jawa and Bali. For timber export from private land on other islands, the scope is limited to 23 timber species: Jati (Teak), Mahoni (Mahogany), Nyawai, Gmelina, Lamtoro, Kaliandra, akasia (Acacia), Kemiri, Durian, Cempedak, Dadap, Duku, Jambu, Jengkol, Kelapa, Kecapi, Kenari, Mangga, Manggis, Melinjo, Nangka, Rambutan, Randu, Sawo, Sukun, Trembesi, Waru, Karet, Jabon, Sengon and Petai.
Land owners of private forest or community forest are not required to obtain an SVLK certificate (Sistem Verifikasi Legalitas Kayu) / Timber Legality Verification System certificate. Instead, another Supplier Verification Form (Dokumen Kesesuaian Pemasok (DKP) is considered as legal evidence adhering to SVLK.
The below listed key documents are based on the applicable legislation and are considered to play a key role in demonstrating legal origin. The full list of applicable legislation is accessible here (Global Forest Registry).
Processing and Trade
Bans and quota
A presidential instruction signed in May 2015 prevents new logging licenses being granted for a further two years, and is almost identical to the previous moratorium. All log exports from Indonesia are banned. Exports of (rough) sawn timber for all species are banned to protect domestic wood processing industries.
Cites and protected species
There are some tree species listed on CITES Appendix II from Indonesia.
- Ramin (Gonystylus spp.). The CITES listing applies to all parts and derivatives of the tree, except seeds; seedling or tissue cultures obtained in vitro, in solid or liquid media, transported in sterile containers; and cut flowers of artificially propagated plants.
- Agarwood (Gyrinops spp.). Indonesia has a quota for this species of 5000 kg in 2015. The CITES listing applies to all parts and derivatives except: seeds and pollen; seedling or tissue cultures obtained in vitro, in solid or liquid media, transported in sterile containers; fruits; leaves; exhausted agarwood powder, including compressed powder in all shapes; and finished products packaged and ready for retail trade; this exemption does not apply to beads, prayer beads and carvings.
- Agarwood (Aquilaria spp.) Indonesia has a quota for this species of 178500 kg in 2015. The CITES listing applies to all parts and derivatives except: seeds and pollen; seedling or tissue cultures obtained in vitro, in solid or liquid media, transported in sterile containers; fruits; leaves; exhausted agarwood powder, including compressed powder in all shapes; and finished products packaged and ready for retail trade; this exemption does not apply to beads, prayer beads and carvings.
- Himalayan yew (Taxus wallichiana). The CITES listing applies to all parts and derivatives except: seeds and pollen; and finished products packaged and ready for retail trade
- Serpentine wood (Rauvolfia serpentine). The CITES listing applies to all parts and derivatives except: seeds and pollen; and finished products packaged and ready for retail trade.
In addition to the CITES-listed species there are some tree species which are protected by national law. These species are locally known as Tengkawang and are all member of the Shorea family.
- Shorea beccariana
- Shorea compressa
- Shorea gysberstiana
- Shorea lepidota
- Shorea martiana
- Shorea mexistopteryx
- Shorea micrantha
- Shorea palembanica
- Shorea pinanga
- Shorea semiris
- Shorea singkawang
- Shorea stenopten
- Shorea stenoptera
National action on timber legality
Indonesia and the EU entered into negotiations for a voluntary partnership agreement in March 2007. The Agreement was signed in September 2013, and ratified in April 2014.
Under the VPA, Indonesian timber is deemed legal when its origin, production, processing, transport and trade are verified as meeting all applicable Indonesian laws and regulations included in the VPA legality definition. Indonesia’s legality definition includes a set of five clear legality standards for different forest types.
Indonesia has developed a national timber legality assurance system called SVLK (Sistem Verifikasi Legalitas Kayu). The SVLK licensing authorities currently issue ‘V-legal’ licences to accompany exports of verified legal wood. When the timber legality assurance system is operating as described in the VPA, the licensing authorities will issue FLEGT licences to accompany exports of verified legal timber destined for the EU. An agreement by Indonesia and the European Union (EU) has been reached, to issue the world's first Forest Law Enforcement, Governance and Trade (FLEGT) timber license as a major achievement in the fight against illegal logging (FLEGT.org). As of 15 November 2016, the FLEGT license can accompany shipments of timber exported from Indonesia to EU member states to certify that the timber has been harvested, transported, processed and traded according to Indonesian law.
Indonesia will continue to issue V-legal documents for other export destinations. Before issuance V-Legal documents are submitted in the online system of the Ministry of Forestry, which connects automatically to the system of the Ministry of Trade.
Third party certification
Indonesian forest regulations require that forestry business units must get certified for Sustainable Forest Management (SFM), or at the minimum be certified for legality. Further, all timber-related industrial units, either primary or secondary industry, have to obtain a legality certificate. The assessment or audit for Sustainable Forest Management (“PHPL”) or Timber Legality Verification (VLK) is conducted by independent assessors, accredited by the National Accreditation Body. The SVLK (TLAS) certificate guarantees that the operator / timber industry complied with the legality standards and criteria, and need subsequently obtain a V-Legal document for every consignment or export. The V-Legal document ensures that the corresponding timber and timber products came from legal sources.
A relatively small part of the Indonesian forest area has been certified under a voluntary scheme. Thus far 2,186,422 hectares are covered by a FSC FM certificate and an additional 690 815 hectares are covered by an IFCC certificate. The Indonesian Forestry Certification Cooperation (IFCC) standard is a national standard which is endorsed by PEFC. Currently, the issued IFCC certificates focus on plantation forests producing roundwood for the pulp and paper industry, although the standard allows for certification of both plantation and natural forests. Other efforts have been made on forest certification in Indonesia against e.g. the Bureau Veritas Origin and Legality of Wood (OLB) standard and the Rainforest Alliance Verification of Legal Compliance (VLC) standard.
A somewhat different certification system is the Certisource Legality Assurance System (CLAS), which is thus far only used in Indonesia. This certification system is based on both WWF-GFTN and Indonesian legality criteria, and has been developed to verify legal production and trade. The system uses the traditional Chain of custody auditing approach, supported by DNA tracking technologies. CertiSource policy requires concessions and sawmills to demonstrate a concrete commitment to reach sustainable forest management certification.
Sources of information
- Bureau Veritas Logging enterprise OLB certified bodies list
- CITES database
- EU FLEGT Facility (2015) Indonesia: Scoping Baseline Information for Forest Law Enforcement, Governance and Trade. Baseline Study 7
- FSC (2015) FSC report “Facts & Figures” – January 2016
- Global Forest Registry
- Indonesia – EU (2015) Indonesia and the European Union - Annual Report May 2014 – April 2015. Implementing the Indonesia - EU FLEGT Voluntary Partnership Agreement
- Government of Indonesia (2014) Regulation of Director of General Forestry Business Development number P.14/VI-BPPHH/2014: Standard and guideline of performance assessment implementation of sustainable production forest management and timber legality verification
- PEFC Facts & Figures - November 2015
- Rainforest Alliance Verification of Legal Compliance (VLC) - verified clients
- WWF GFTN & TRAFFIC (2012) Framework for Assessing Legality of Forestry Operations, Timber Processing and Trade Annex - Indonesia
- WWF GFTN Country profiles - 2015: Indonesia
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Source: Transparancy International